The ADF will urge the Government to address these concerns through a Regulatory Impact Statement (RIS), to be disclosed to industry as soon as possible.

“It’s hoped the introduction of a mandatory code will be a vital step in rebuilding trust and confidence along the dairy industry supply chain,” the ADF said.

The ADPF, which represents the Australian milk processing and manufacturing companies, said it was “disappointed” but was “committed to achieving positive, beneficial outcomes for the industry”.

It said work had been done to update the existing voluntary Dairy Industry Code of Practice to deliver a set of guidelines for negotiating milk price between farmers and processors in good faith, and establish a dispute resolution mechanism.

“We hope this can be used as a framework to inform any future code,” the ADPF said in a statement.

Mr Littleproud has welcomed the ADF’s decision.

He told the dairy sector at the end of August to come up with a united position on a mandatory code and the ACCC report into the dairy industry, which was released in April.

“Now that we have direction from the organisation representing dairy farmers across Australia, we can move forward. I agree with ADF that a mandatory code must deliver coverage across the entire industry and improve bargaining power for Australian dairy farmers.

“I will work with farm groups to get this code right.”

Mr Littleproud said while a mandatory code should improve bargaining power it is unlikely to change milk prices.

“The ACCC report stated the farmers were at a disadvantage given processors had better access to market information, and that’s something we’re working on through the milk price index. We’ll continue to look carefully at the issues raised in the ACCC report as we work with industry to come up with actions in response to the report.”